Technology Shakes Up Real Estate and Paves Way for Powerful Future
The commercial real estate industry has traditionally been slow to embrace new technology – often times, due to underinvestment, fear of negative ROI, or outright skepticism. Historically, as innovation swept through other industries, CRE clung onto spreadsheets and manual work – until recent years, when a major shift took place.
To put it concisely, the pandemic was unexpected. In time, however, it challenged CRE professionals to rethink how they do business. While some pandemic-era changes may fade, advancing and adopting technology in commercial real estate is here to stay. Brokerage firms and asset managers alike are realizing that investing in technology can be a key business driver.
It’s no secret that real estate has long been a relationship-driven business. Yet, the connections facet of CRE isn’t enough anymore. To maintain a competitive edge, asset owners and brokers must learn more about new technology trends to remain competitive, delight their clients, and drive innovation forward.
With this in mind, let’s dive into some of the major trends rocking the CRE tech world.
Digital Twins
A market that may be worth $35.8 billion in 2025? Digital twin technology. The term “digital twin” describes a virtual 3D model of a property. When referencing commercial real estate, it’s a virtual representation of a physical building.
Connected to sensors throughout a property, virtual twins equip property managers with a snapshot of a building’s overall health. Simultaneously, they provide a glimpse into the operational state of critical features, including HVAC, plumbing, security systems, and more. Leveraging real-time data, digital twins allow owners and property managers to play a preventative role in managing their assets. Owners can deploy a fix months – and even years – before an issue becomes catastrophic.
Beyond this, digital twins have the power to help shrink a building’s carbon footprint. A Singapore-based company, Nanyang Technological University, used digital twin technology to reduce energy use, water consumption, carbon emissions, and waste across its campus. According to an EY white paper, the company reduced energy consumption by 31% and attained $4.7 million in cost savings over 10 years.
Property Tours Go High-tech
Prior to the pandemic, it wasn’t rare for CRE brokers to jetset across the nation – and even internationally – to join clients in the hunt for office spaces. Facing unprecedented circumstances, however, brokers pivoted. They adapted. They began touring properties virtually, from wherever they were in the world.
Now, some brokers and property managers opt for low-tech touring models where they use their smartphone cameras to give prospective tenants a look at a property. Others invest in a more immersive experience, via drones. How does it work? Hired drone operators fly around the neighborhood and show the building from the outside (it’s a 360-degree visual experience). Then, the operators navigate the drones through the front entrance of the space and proceed to show the interior to viewers.
While virtual tours may not reign as the be-all and end-all, most industry experts expect them to remain a vital part of the deal process. Since virtual tours add convenience and cut travel costs, prospective buyers/tenants may use them to narrow down options and easily compare properties side-by-side.
Budgets aside, virtual tours aren’t disappearing anytime soon – and they will likely grow more and more immersive with time and technology advancements. And, virtual touring doesn’t discriminate when it comes to real estate – it’s useful in residential, retail, industrial, office, storage space, multifamily, and more.
Mobile Credentialing
The last time office building lobbies drastically changed was in 2011. Following the September 11, 2001, tragedy, landlords added extra security measures like cameras, turnstiles, and programmable elevators to protect tenants.
Now, in the wake of COVID-19, many landlords are revamping lobbies again to prioritize tenants’ health and safety. Swapping out plastic badges/IDs for mobile apps (that are tied to building security/operating systems) does more than just reduce physical waste – it caters to convenience in the digital age. Within a mobile app, workers or building visitors upload identification and other information, such as prescreen questions, vaccination status, and more. The contactless experience allows smartphones to open turnstiles or elevator doors. Mobile apps can also increase awareness of building amenities, all while providing real-time announcements and alerts to occupants.
The New Kid on the Block: Blockchain
While we typically hear about blockchain as it relates to cryptocurrencies, it can also play a key role in commercial real estate – potentially even transforming core operations such as property transactions (purchase, sale, financing, leasing, and management). Blockchain technology is a digitized, distributed ledger that immutably records and shares information. So, why is it worth investigating?
Blockchain can address inefficiencies and inaccuracies in CRE, as it allows for:
Near real-time settlement of recorded transactions
Two parties to transact directly with each other without a trusted third party
Verifiable records of every transaction ever made (a paper trail without the clutter and clunk)
Through blockchain technology, asset owners can alleviate existing challenges in their leasing transactions, and:
Eliminate time-consuming, predominantly paper-driven processes
Provide real-time rich data to assist with leadership’s decision-making capabilities
Because it closes gaps in key CRE processes, blockchain has significant potential to drive transparency, efficiency, and cost savings for asset owners.
More than ever, technology impacts our daily lives – and this extends to multiple facets…not just our work, not just the CRE realm. Technology and innovation continue to change industries, products, services, and business models. The pandemic altered plenty of things – and it has only driven PropTech and digital technology forward in the commercial real estate sector. Increasing numbers of industry professionals now recognize that technology can empower them to make the best possible decisions, gain productivity, better serve their clients (and tenants!), and get ahead through sustainable means. For commercial real estate, tech increasingly permeates the present – and, it’s paving the way for a brighter, bolder future.